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Friday, October 11, 2013

Child Held Liable for Parents’ $104,216 Nursing Home Bill in North Dakota Case

The North Dakota Supreme Court has upheld a lower court
ruling that the son of deceased nursing home residents is liable for the unpaid
costs of care provided to his parents. The case was returned to the lower court
to properly apportion the liability among the son, his 5 siblings, and the
parents’ estates.The case is Four
Seasons Healthcare Center v. Linderkamp,213 ND 159 (September 4, 2013).

Elden Linderkamp’s parents resided in the Four Seasons
nursing home from October 2006 until their deaths in December 2009 and
September 2010. After their deaths Four Seasons sued Elden for the unpaid cost
of care it provided to the parents.

Fraudulent Conveyance

As part of its case, the nursing home sought to void a deed of
real estate from the parents to Elden and his wife, Rita, on the grounds that
it involved a “fraudulent conveyance.”

North Dakota law [N.D.C.C. § 13-02.1-04(1)], provides:

A transfer
made or obligation incurred by a debtor is fraudulent as to a creditor, whether
the creditor's claim arose before or after the transfer was made or the
obligation was incurred, if the debtor made the transfer or incurred the
obligation:

a. With actual intent to hinder, delay, or defraud any creditor of the
debtor; or

b. Without receiving a reasonably equivalent value in exchange for the
transfer or obligation, and the debtor was engaged or was about to engage in a
business or a transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or transaction or the debtor
intended to incur, or believed or reasonably should have believed that the
debtor would incur, debts beyond the debtor's ability to pay as they became
due.

Elden had been farming the property in question for over
twenty years under a lease from his parents. In August 2006, two months before
the parents entered the nursing home, they signed a contract selling the
property to Elden and his wife for $50,000. The final deed was signed in
November 2006.

The lower court determined that the transaction was
fraudulent because Elden had paid less than the property was actually worth. It
voided the deed as a fraudulent conveyance. The Supreme Court affirmed this aspect of the lower
court’s decision.

Filial Support

In addition, the nursing home sought to hold Elden liable for
his parents’ cost of care under North Dakota’s filial support law. That law
(N.D.C.C. § 14-09-10) states:

It is the
duty of the father, the mother, and every child of any person who is unable to
support oneself, to maintain that person to the extent of the ability of each.
This liability may be enforced by any person furnishing necessaries to the
person. The promise of an adult child to pay for necessaries furnished to the
child's parent is binding.

Although the statute mentions that a child’s promise to pay
for necessaries is binding, it is clear that no such promise is required to
make the child liable. Pennsylvania has a similar law – See, 23 Pa.C.S.A §§ 4601-4606(2005) (Support for the
Indigent)

The lower court held that under the filial support law Elden was
personally responsible for the unpaid cost of his parents’ care. The amount due
the nursing home was $104,216. The lower court refused to consider whether Elden’s
siblings were required to share in this liability.

On appeal, the Supreme Court agreed that Elden was
responsible for the cost of his parent’s care. It said: “The language of
N.D.C.C. § 14-09-10 imposes a duty on children of parents who are unable to
support themselves to maintain their parents to the extent of the ability of
each child, which may be enforced by any person furnishing necessaries to the
parents.”

But the Supreme Court held that the lower court erred in
holding Elden solely liable without deciding the extent of the other children's
responsibility under the filial support statute. It returned the case to the
lower court for consideration of this issue and apportionment of the debt.

Thus in North Dakota, as in Pennsylvania, the courts will
permit a nursing home, as a provider of necessaries to the parent, to sue the
children to collect the parent’s unpaid bills. Liability under this curious
form of “support” continues for debts incurred by the parent during life, even after
the parent is deceased and thus no longer in need of support.

My two cents. The result in the Four Seasons case
is another stark example of the financial risk children bear in states
like Pennsylvania and North Dakota for the cost of care provided to their aging
parents.

There are ways that families can seek to mitigate this risk.
In particular, children need to ensure that their parents maximize any third party sources of
payment that may be available such as Medicaid, Medicare, VA pension benefits and long
term care insurance. Proper advance planning with a qualified elder law
attorney can help keep families out of trouble.

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About Me

I am a Pennsylvania lawyer with over 35 years experience in estate planning and elder law. I was selected by US News Best Lawyers® as its Lawyer of the Year in Elder Law for 2014 for the Harrisburg, Pennsylvania metropolitan region.
I am of counsel to Marshall, Parker and Weber, a law firm which has offices in Williamsport, Jersey Shore, Wilkes-Barre and Scranton, Pennsylvania. I am past President and a founder of PAELA (the Pennsylvania Association of Elder Law Attorneys). However, the views expressed on this site are my own and not those of PAELA or of Marshall, Parker and Weber.
Most importantly I am a husband, father and grandfather.